Small town India could be servicing back-office needs of US doctors

In this series, Sramana Mitra shares chapters from her book Vision India 2020, that shares 45 interesting ideas for start-up companies with the potential to become billion-dollar enterprises. These articles are written as business fiction, as if we’re in 2020, reflecting back on building these businesses over the previous decade. We hope to spark ideas for building successful start-ups of your own.

One of the key issues that India was wrestling with in 2008 was how to preserve the country’s integral outsourcing industry, which remained largely entrenched in the major metro areas: Delhi, Mumbai, Bangalore, Chennai, Hyderabad, Pune, and Kolkata.

The urban cost structure was rising in all dimensions from real estate to wages, competition for talent was severe, and attrition rates were high. The workforce was highly unstable. Companies who invested in training employees would often lose them as they callously jumped ship without a moment’s notice. Rural and small-town India, in contrast, seemed attractive both cost-wise and culturally, offering more loyalty and stability, as well as better return on investment for quality training. In the face of rising costs and complexity, everyone agreed that rural and small-town BPO was an essential strategy for maintaining the labor arbitrage advantage.

Another opportunity we zeroed in on was not on the Indian side, but the American. While the Indian BPO industry was primarily servicing larger companies in the US, another five million small businesses with significant outsourcing potential dotted the landscape. Even if such businesses only outsourced a modest $5,000 per year, this segment would top $25 billion.

Of these small businesses, one segment was particularly interesting: doctors’ offices. At the time there were more than a million physicians in the US, including family and general practitioners, surgeons, pediatricians, dentists, psychiatrists, chiropractors – the list goes on. A large percentage of these were in small private offices, which, by their very nature, had significant insurance claims processing needs, as well as the standard billing, payroll, collections, accounting, and tax-related needs. Doctors were effectively running full-fledged small businesses. And collectively these small businesses made up a multi-billion-dollar business opportunity if we could crack the formula for customer acquisition in this utterly fragmented market. This was the investment thesis behind our BPO venture, Maya Ray.

To begin, we launched the Maya Ray brand through a sharply targeted advertising campaign on Epocrates. Epocrates provided clinical reference content to healthcare professionals on their handhelds, PDAs, and smartphones. With the content, they also delivered advertising. More than 500,000 healthcare professionals, including more than one in four US physicians, actively used Epocrates’s mobile and Web-based content services. It was the perfect vehicle for Maya Ray, our ultimate medical office assistant.

Twelve years later, Maya Ray boasts 90,000 small doctors’ offices as clients. For most, we deliver a comprehensive set of services, from secretarial to claims processing to billing, collections, accounting, and taxes. On average, each client pays $1,000 per month, amounting to $12,000 annually.

In 2020, our annual revenue stands at over $1 billion.

On the service delivery side, of course, we started with the notion of rural and small town BPO. We took gradual risks in selecting our locations and did not go straight to a remote rural destination. Our first major back-office operation was in Howrah, near Kolkata. It had a large population and no other BPO employer, making it easy to recruit and retain talent. At the same time, it was close to Kolkata, a major metro, which gave us access to experienced management talent.

Slowly, we built successful operations in Barakpur, Krishnanagar, Uttarpara, Ulubaria, Midnapur, Haldia, Bolpur, Madhyamgram, Barasat, Naihati, Chandennagar, Sreerampur, Uluberia, Murshidabad, Bandel, Purulia, Chittaranjan, Bardhaman, Bankura,nDurgapur, Asansol, Malda, Raiganj, Siliguri, and Jalpaiguri –all small towns in West Bengal. On the positive side, these heavily rooted agriculture and manufacturing regions had no other BPO employers, so our entry into these markets created tremendous enthusiasm. On the other hand, none of these towns supplied any trained management talent either. To overcome this, we recruited designated general managers from each location and trained them extensively at the Howrah operation. Then, embellished with a tray of perks, we moved them back to their hometowns. These perks included cars, chauffeurs, houses, maids, cooks –a positively luxurious lifestyle –for which, in exchange, we asked for their loyalty, commitment, and hard work.

I was once invited to the home of one of our general managers in Purulia. She was a mid-thirties woman, formerly an employee of TCS Kolkata. Originally from Purulia, she had reached a point in her life where she wanted to move back. Maya Ray had given her that opportunity, returning her not to her childhood home, but to a sprawling two-acre property, where she lived with her husband, three children, in-laws, and household staff. Her husband’s two brothers and their families also lived in the homestead as an extended family. A beautiful papaya orchard surrounded the main house. And at dinner they served a wide variety of vegetable dishes all grown on the property, as well as fish from their pond. As we sat eating, talking into the dusk, there was no question in my mind that her lifestyle was more luxurious than mine in Menlo Park. But here, in India, such things were economically viable –they were, in the end, sound business.

Each of our operations employed 5,000 people, and by 2015, we had 25 operations in the small towns of West Bengal, with a total workforce breaching 125,000 people. We started with an average Rs. 10,000 ($200) per month salary, although that rose to Rs. 20,000 ($400) over the next 10 years.

During the past five years, we have used 10 of the small-town operations as hubs to create rural centers. Each small-town center manages 10 rural centers of 100 people each. This experiment was important for us as we were also deeply committed to making the development-economics angle sustainable and widespread. India’s development, without question, had to include a comprehensive strategy for bringing rural India out of its underleveraged state.

We were perfectly aware of the challenges of bringing up these rural centers. English was not widely spoken, infrastructure was even weaker, office buildings were of inadequate quality, and broadband was unreliable. But the low real estate cost and various other advantages compensated for these drawbacks.

Training was also a challenge, but not insurmountable. We created a PR campaign focusing on the lifestyles of our rural and small-town employees to attract trained managers away from the chaos of big cities, traffic, small apartments, and pollution. And what our employees lacked in terms of language or computer skills, they more than compensated for in work ethic, commitment, and desire to learn.

I still remember a young man who came to interview during the early days of the Bankura operation. In 102-degree heat, he had cycled in what looked like a newly purchased black suit. He was drenched in sweat, embarrassed and helpless. But past the lack of sophistication, I saw in that moment both innocence and work ethic that, to this day, sustains the company’s culture. These are not the kind of people who jump from company to company three times a year. They are the kind upon whose shoulders and hearts companies can be built to last.

The basic attitude and intelligence level was also excellent, and since my philosophy has always been, “Hire for attitude, train for skill,” we knew from the get-go that training was something we would invest heavily in. They worked 12-hour days without a frown and celebrated Holi, Durga Puja, and Saraswati Puja with their colleagues and families on the office grounds.

On the operational side, we also made some important decisions so as to be able to both scale efficiently and gain access to customer bases through partnerships. We derive efficiency by using software-as-a-service vendor partnerships with AthenaHealth, Intuit, and others who provide enabling technology, as well as referral business. In many cases, they resell our services as part of their own portfolio, or they simply treat us as an extension of their own service offering.

In 2020, thus, Maya Ray’s workforce spans the length and breadth of West Bengal. Other such ventures have blossomed throughout India, following our example. One, based in Madhya Pradesh, focuses on back-office work for an equally large segment: US law offices. Another, based in Rajasthan, works for the hospitality segment. Overall, the rural and small-town BPO sector now employs two million people, generating close to $10 billion in revenues. Not from the city centers – not from Kolkata or Delhi – but from lesser-known and now booming rural outposts. Here India has expanded its core competencies and, in doing so, broadened the mighty tiger’s play on the world’s stage.